{UAH} Richard Nixon Hated the Presidential Daily Intel Brief, Too
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Why the Trump Economic Boom Will Never Come
Yes, the markets are looking good (for now). But subsidized deal-making and tax cuts for the rich are the surest sign of a bubble.
Judging from Wall Street's recent record-breaking streak, America chose the right candidate. Since Donald Trump was elected president of the United States, the Dow Jones industrial average has set all-time highs 11 times.
This was not supposed to happen, for two key reasons. First off, markets like stability, and Trump — as the dark-horse candidate — was seen as unlikely to win the election, so a Hillary Clinton win was already priced in, by and large. So much for the pollsters. Second, because of this laggard candidate status, a potential Trump victory was seen as a potentially hugely upsetting event for global stocks due to the uncertainty his presidency would herald. So much for the stock pickers.
But, like most things Trump, this rally will prove a mirage — and sooner rather than later. Here's why:
Trump's brash, radical, and quasi-dictatorial style is already unsettling global political and economic affairs in a way that will weigh on the recent market calm once it all registers more concretely in the economic data.Trump's brash, radical, and quasi-dictatorial style is already unsettling global political and economic affairs in a way that will weigh on the recent market calm once it all registers more concretely in the economic data. Before even taking office, the president-elect has antagonized China on both security and trade, dragged the stocks of several major companies lower with off-the-cuff comments, and dismissed findings from the CIA indicating that Russian hackers actively favored Trump during the campaign. And he hasn't even started imposing tariffs on U.S. companies manufacturing overseas.
Why have equity markets rallied so far? They seem to be focused on Trump's promises while ignoring his threats, as Reuters's James Saft aptly puts it. But Trump has also shown he's not likely to back away from his anti-trade agenda, which carries a high risk of retaliation from major trading partners like China and Mexico, and could devolve into a damaging all-out trade war. He has so far appointed an economic team that also very much points in this direction.
Wall Street's excitement over tax cuts is not tough to grasp — the rich stand to benefit overwhelmingly from his plans, if they are approved by the Republican-controlled Congress. However, salivation over the prospect of a broader fiscal stimulus impact from Trump's policy measures is likely misguided. If anything, the last two decades of economic policy have reaffirmed the failure of the sort of trickle-down economics that Trump and his advisors are espousing.
Studies from both sides of the political spectrum have shown, in a manner logical to most dispassionate observers, that fiscal spending aimed at the poor is most likely to have a large short-run impact. That's another way of saying the poor and middle class are more prone to spend newly available funds than the very rich, who have a greater propensity — and, these days, the luxury — to save.
With the U.S. economy facing pervasive issues like low labor force participation and high long-term unemployment, the kind of spending and tax cuts undertaken by the government matter now more than ever. So far, Trump's outlined proposals sound more like private sector giveaways of the sort that underpinned his deal with air-conditioner manufacturer Carrier in Indiana than any deeper program able to address the steep job losses experienced in many parts of the country that helped Trump win the election.
According to Olivier Blanchard, the former chief economist at the International Monetary Fund, the kinds of public-private partnerships touted by the Trump program may not be the right approach. "By aiming at projects that can at least partly pay for themselves financially, they may generate the wrong kind of public investment," says Blanchard. "Maintenance and the most useful public projects may have high social returns, but they are likely to have low financial returns."
There is also plenty of ground for concern about the president-elect's deal-making approach to politics, which may have served him well in negotiating casino contracts in Atlantic City but might not jive with Chinese notions of geopolitics. His deal with Carrier to supposedly keep some jobs from going to Mexico — no one is privy to the company's internal decision-making — with a state government-funded $7 million tax cut was an example of just how poorly Trump's microeconomic vision applies to macroeconomic scenarios. To most observers, his move simply invited more pleas for subsidies from other companies and commensurate threats about the possibility of offshoring jobs.
Then there's the less tangible but potentially more important social impact of an ideology that contains strong elements of anti-immigrant, anti-Muslim, and anti-Semitic racism, which is not only anathema to American history but also widely seen as detrimental to economic growth.
Social tensions in the United States are now arguably at their highest levels since the civil rights era, hardly the sort of environment in which consumer spending and business investment flourish.Social tensions in the United States are now arguably at their highest levels since the civil rights era, hardly the sort of environment in which consumer spending and business investment flourish.
True, corporate profits in select, protected sectors that benefit from Trump's largesse, like oil and steel, may get goosed for a couple of quarters, which can help explain the short-run spike in stocks. An index of homebuilder sentiment surged in December as the industry figured a Trump presidency would, by definition, be good for real estate. Also true: Rich people will get tax cuts, and they own a lot of stock. So that's good for the Dow, for now. But good luck to the investor trying to time the jump from that runaway train.
Photo credit: SPENCER PLATT/Getty Images
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Richard Nixon Hated the Presidential Daily Intel Brief, Too
But if Donald Trump is really, "like, a smart person" he'll realize the CIA isn't out to get him.
This president-elect knows how to hold a grudge; few of them seem stronger than the one he harbors toward the CIA.
He laments its analysts' incorrect judgments from many years ago. He sees political bias in their current assessments. And he remains convinced that they worked behind the scenes to get his opponent elected in his place. The CIA's access and influence with the commander in chief, which has waxed and waned during previous administrations but has never failed to bounce back, appears to be at an all-time low.
Sound familiar? Not so fast — this describes 1968, and the president-elect is not Donald Trump but Richard Nixon.
On the surface, the two men look quite different. Few modern presidents entered office with more national political experience and foreign-policy understanding than Nixon, the former senator and eight-year vice president under Dwight Eisenhower. Trump is the only president-elect with neither political nor military experience.
Beyond this, however, the parallels are indeed strong. Trump's digs at intelligence during the campaign and his reported light pace of briefings thus far during the transition — once per week, as opposed to the normal daily briefings that most presidents-elect have accepted — presage a relationship with intelligence much closer to Nixon's pattern than that of any other chief executive. Understanding the dynamics that were present in 1968-1969 sheds light on what may come to pass in the coming months — and offers a glimmer of hope for a better intelligence-policy relationship during the Trump administration than now appears likely.
Most of the similarities are worrisome. During his very first post-election session with Henry Kissinger, who would become his national security advisor, Nixon excoriated the agency as a group of "Ivy League liberals" who lacked analytic integrity and had always opposed him politically. Even decades later, Kissinger echoes Nixon's mindset. "I thought the analytic branch was occasionally a subdivision of the New York Times," he told me. "Biased very much to the liberal point of view."
The effect was clear. While in office, Nixon denied CIA officials access to his most sensitive policy deliberations, blocking any insights they could have gained into what intelligence inputs would help most. In a June 1969 National Security Council meeting, with CIA officials in the room, the president accused agency analysts of trying to "use intelligence to support conclusions, rather than to arrive at conclusions." Even today it remains unclear if Nixon actually read the President's Daily Brief (PDB), the agency's flagship top-secret product tailored explicitly to each president's perceived preferences.
Trump also started off on a negative note with the intelligence community. Before he'd even had his first classified briefing as a candidate, Trump took a question about whether he trusted intelligence. "Not so much from the people that have been doing it for our country," he replied. "I mean, look what's happened over the last 10 years." At the NBC News presidential forum on Sept. 7, Trump said he "didn't learn anything" during his subsequent intelligence briefings to alter his views on how to fight the Islamic State.
Most notably, Trump has repeatedly pushed back publicly against assessments of the Russian role in, and motivation for, hacking inside the United States during the election. After the Office of the Director of National Intelligence (ODNI) and Department of Homeland Security on Oct. 7 issued a joint statement that the U.S. intelligence community had become "confident that the Russian Government directed the recent compromises of e-mails from US persons and institutions, including from US political organizations," Trump claimed the Russians might not have done the hacking and even "maybe there is no hacking." In early December, Time magazine quoted Trump as saying — after winning the election and sitting in on at least three full PDB briefings — "I don't believe they interfered.… It could be Russia. And it could be China. And it could be some guy in his home in New Jersey."
On Dec. 9, the tension between the intelligence community and the Trump team escalated again. Reports emerged that key senators had received classified briefings moving beyond the judgment that Russia aimed to merely undermine confidence in the U.S. electoral system to an assessment that Russia intended to help Trump's campaign. The Trump transition office quickly issued a public statement, which started, "These are the same people that said Saddam Hussein had weapons of mass destruction."
Trump himself expanded on this in a Fox News interview on Dec. 11, in which he said, "I don't have to be told — you know, I'm, like, a smart person. I don't have to be told the same thing in the same words every single day." It's not hard to imagine similar words coming out of Nixon's mouth.
Yet in one important respect, Nixon and Trump are worlds apart.Yet in one important respect, Nixon and Trump are worlds apart. And this difference provides hope that Trump's relationship with intelligence may yet grow into something more satisfactory: Trump has been more open to intelligence briefers in 2016 than Nixon was in 1968.
Back then, the president-elect did not take a single face-to-face meeting with the CIA officers in place to provide transition support. When they instead sent him envelopes containing copies of the PDB and other intelligence documents for him to read at his convenience, they heard no feedback. Their suspicions about Nixon's lack of interest were confirmed near the end of the transition when the president-elect's office returned to them a towering stack of top-secret PDB envelopes — all of them unopened.
Not so in 2016. Despite Trump's remarks about being told the same things over and over, his reaction has included positive elements. At the NBC News forum in September, Trump called his campaign intelligence briefers "experts" and implied that they had impressed him: "When they call it intelligence, it's there for a reason."
And he has sat down for top-secret sessions, apparently each week, with briefers from the ODNI — far more direct exposure to intelligence officers than Nixon had during his transition. On Dec. 11, he told Fox News that these were "very good people that are giving me the briefings."
Unlike Nixon, Trump has also given the intelligence community insight into what he wants from intelligence. Back in early 1969, CIA officers were so desperate for insight into what would work for Nixon that they took an offhand comment from Attorney General John Mitchell — "The president is a lawyer, and a lawyer wants facts" — to reformat the PDB, separating facts and opinions such that analysts' commentary appeared only after the relevant intelligence reporting. The change seemed to have little effect.
Trump, however, has given intelligence officers something to work with. By saying that he doesn't want to be told "the same thing in the same words every single day," he gives more insight into what might work better for him than anything intelligence officers got directly from Nixon.
The President's Daily Brief has always been tailored to the preferences of the new Oval Office occupant, and it's easy to imagine that efforts are now underway to change the PDB's format to minimize repetition and instead emphasize what is new and different. A shorter and punchier PDB may be the result, more akin to a top-secret Twitter feed than a series of long articles thick with analytic language and nuance. Briefers would need to focus on varying their language and pointing out the nuggets of intelligence that give the president opportunities for immediate action.
The Nixon years tested the patience of intelligence analysts, perhaps more so than in any other administration. There is little doubt that trying times again are ahead for the intelligence community. Unlike 1968, however, there is now at least a minimal dialogue to build on. Trump may yet realize that building a bridge to his intelligence officers — instead of burning it — will pay dividends in his new business, the presidency of the United States.
Photo credit: Getty Images/Foreign Policy illustration
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